The Short-Run Macro Model

question 9

Multiple Choice

The short-run macro model

• A) is an attempt to explain why the economy tends to perform better in the short run than in the long run
• B) was developed during the Great Depression to explain the economy's continuing poor performance
• C) lost its popularity during the 1950s
• D) was developed during the early 19th century
• E) explains the forces that work to drive the economy to full employment

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Definitions:

Preferred Stock

A type of equity security that typically offers fixed dividends and has priority over common stock in asset liquidation.

Unpaid Dividends

Dividends declared by a company's board of directors that have not yet been paid out to shareholders.

Dividend Yield

An indicator demonstrating the yearly dividends paid by a company compared to its stock price.

Constant Growth Stock

A stock assumed to pay dividends that grow at a constant rate indefinitely, making it possible to use dividend discount models for valuation.